A new report released on Friday by the African Development Bank (AfDB) and the World Bank reveals that $40 billion worth of remittances by African migrants in 2010 helped to reduce poverty in local communities.

According to the report, recorded remittances into Africa, which grew fourfold between 1990 and 2010, are the continent’s largest source of foreign capital after foreign direct investments.

Investments such as land purchases, building homes and starting businesses were the highest uses of remittances sent home by African migrants.
Presenting the report at the International Fund for Agricultural Development (IFAD) headquarters in Rome, Italy, Dilip Ratha, the main author of the report and lead Economist at the World Bank, said that the potential of migration for Africa remains largely untapped.

"African governments need to strengthen ties between the Diaspora and home countries, protect migrants and expand competition in remittance markets,” he noted.

IFAD works with poor rural people to enable them grow and sell more food, increase their incomes and determine the direction of their own lives.

The report further stresses that with about 30 million Africans living outside their home countries, migration is a vital lifeline for the continent.
Yet African governments need to do more to realize the full economic benefits of the phenomenon.

The report titled "Leveraging Migration for Africa: Remittances, Skills and Investments” presents data from new surveys and finds evidence that suggests migration and remittances reduce poverty in the communities of origin.

Remittances lead to increased investments in health, education and housing in Africa. The Diaspora also provides capital, trade, knowledge and technology transfers.

Stephen Ogongo Ongong, a migrant and the Editor of Africa News, said that it is important for Africans living abroad to be sending money home with a clear purpose.

"Apart from the money they send for basic family needs, they should also be given the opportunity to identify viable investment projects to channel part of that money,” he noted.

The report recommends that post offices, savings and credit cooperatives, rural banks and microfinance institutions that have large branch networks can play an important role in expanding access to remittances and financial services among the poor and in rural areas.

"IFAD’s interest in migration issues derives from the fact that migration is intimately related to rural poverty,” said Kevin Cleaver, Associate Vice-President of IFAD.

As a share of total investment, remittances represented 36 per cent in Burkina Faso, 55 percent in Kenya, 57 percent in Nigeria, 15 per cent in Senegal and 20 percent in Uganda.

Education was the second-highest use of remittances in Nigeria and Uganda, the third highest in Burkina Faso and the fourth highest, Kenya.

Two-thirds of migrants from sub-Saharan Africa, particularly the poorest, move to other countries within the region, while more than 90 per cent of migrants from North Africa move away from the African continent.

The principal destinations for African migrants are France (9 %), Côte d’Ivoire (8 %), South Africa (6 %), Saudi Arabia (5 %), and the United States and the United Kingdom (4 % respectively).

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